Acquisitions Anonymous - #1 for business buying, selling and operating - Fire Suppression Business in NYC – Is It Worth the $1M Price Tag?

Episode Date: May 13, 2025

The hosts dig into a fire suppression business for sale in New York, debating whether it's a hidden gem or a risky bet.Business Listing – https://us.businessesforsale.com/us/nyc-fire-suppression-and-consulting-business-in-new-york.aspxSponsored by Acquisition Lab and Connor Gross' Franchise Workshops💼 Ready to buy your dream business? Join Acquisition Lab for expert support, resources, and a like-minded community: https://www.acquisitionlab.com/🔥 Interested in franchises? Get help from expert Connor Gross and sign up for his franchise ownership workshop: https://www.connorgroce.comIn this episode, Heather, Bill, and Travis Jamison take on a fire suppression and consulting business based in New York City with $3.6 million in revenue and $750k in cash flow. The seller is offering up to 50% financing, but the team digs deeper into whether the valuation makes sense given its heavy reliance on project-based income versus more stable maintenance revenue. They explore the impact of compliance-driven demand, the potential of long-term contracts, and what kind of buyer would be best suited for a business like this—concluding that it might be a fit, but only for someone with the right background and connections.Key Highlights:- Breakdown of project vs. maintenance revenue and why it matters- Discussion on market growth due to increased fire regulations- Why seller financing might indicate underlying risk- Considerations for SBA loan structuring in contracting businesses- Who should (and shouldn't) buy this businessSubscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

You kind of tend to value the servicing and maintenance a little bit higher because it's more consistent than the project revenue, which can be lumpy and cyclical and inconsistent. That just changes everything. That is the magic key that's going to unlock or kill interest in this business. This is definitely one of those markets where it feels like there's a fine line between this being an amazing business and it being a terrible business. All set acquisitions. Hello, another episode of Acquisition, Theonymous. We don't have a hundred percent beard anymore. And thumbs downing on just the plus inventory alone. Welcome to Acquisitions Anonymous.

Today's deal. I involved myself, Heather and Travis Jameson, digging into a fire suppression business up in New Jersey. And the past couple episodes, had a strong New Jersey tri-state area bent. So we're excited to bring this one. And I think it would be surprised how we ended up feeling about this deal. So stick around through the whole episode

and see where we ended up kind of as well. we dug into the whole thing. Here is the episode. Are you ready to take a leap into business ownership but you don't know where to start? Well, look no further than Acquisition Lab, the premier resource for entrepreneurs seeking to buy their dream business. Founded by Harvard MBA and acquisition expert Walker Dybul, the lab is your fast-track to success in the search diligence and acquisition process. With hands-on support, world-class resources and a community of like-minded entrepreneurs, Acquisition Lab gives you the tools and confidence to navigate every step of the journey. And we're proud to call Walker and Chelsea, the lab's director, longtime friends

of the podcast. They're passionate about helping entrepreneurs like you take the next big step. So don't wait to make your business ownership dream or reality. Visit AcquisitionLab.com today to learn more and schedule your free consultation. And when you do, be sure to tell them the Acquisitions Anonymous podcast sent you. And we're back. Heather, how's the weather in SoCal? It is beautiful spring weather. It is not getting hot yet, but it's sunny and beautiful. And when you go to the beach and you go for a walk, you see whales because it's like whale season too. It's pretty nice. Do you think people change when they moved to Southern California? Because here's my experience. I went to San Diego and hung out with my wife for a week. And we stayed in

La Jolla. And I was pretty much convinced the number one industry in San Diego was brunch, even on weekdays. So like, what's going on in SoCal that causes us? to happen. We just love being outside because we could do it all year round. You know, like whatever's going on, you get your friends together, you go for a walk on the beach or you go for a hike and everything is really beautiful. And yeah, we go to brunch, you know, afterwards. Got it's great. Travis, how do you feel about people from Southern California? No, they're just the same as, you know, where I live, you know, Asheville, North Carolina, we go look at the whales, we hang outside year-round. It's exactly the same, basically. Same people.

Same vibe. Actually, everyone from here is from California at this point. I bet, yeah. That's the other thing. People in California complain about California, too. You think everybody else does, they do it here too. It's the exact same. It's funny because I bought a business once with employees down in Medellin, Columbia.

Have you guys been to Medellin, Columbia? Yeah. Heather, have you been there? I have not. Yeah. So, yeah, so Travis, tell us about the Eternal Spring. thing. It's super, it's super fascinating. Well, I don't know that much other than just like the weather is always nice, right? It always feels like a spring day. Yeah. It's like better than Southern

California weather. Like it makes San Diego weather look bad. Wow. It's just like perfect every day, 53 low, 72 high, mostly sunny, and it rains every day at 5 o'clock for five minutes. Like that's basically good. And kind of like Southern California, one thing, and I don't, know if this happened to you, Travis, but one thing that shocked me was everybody you talked to there is like, oh, the weather here, it's too perfect. Like, they found a way. We can complain about it. It just blew my mind. It might be true, though. So in Asheville, I think we have like pretty perfect weather, like nine months a year. But that winter months, which aren't terrible, but it really makes you appreciate the rest of the time where, you know, if it's always the same,

if it's always 75 degrees. Like I guess you stop appreciating it as much. Yeah, that's true. So to do the worst non sequitur in history, let me show you guys this. I tweeted it this morning because there has been something that's quietly happened in the United States that nobody really talks about, which is basically the United States has basically won the war on structure fires. like structure fires despite us building a bunch more the number of them in the united states is down over 50% since the 80s like just wow like like heather when you and i were kids right like there were

like people's houses would burn down yeah it was a regular thing yeah true and i can't remember the last structure fire or house fire that i saw you know near me in in san Antonio it was so ingrained in us as kids that we had fire retardant pajamas what yes Yeah, yeah. And there was a, there was a famous episode at some point in my childhood where all of them had to be thrown out because they decided that whatever they were using was toxic. And so our fire retardant pajamas had to be thrown away. They were killing you. They were slowly, but that's because there were structure fires. And they, you know, this is one of the things that they did. But that's interesting. I forgot about that. Growing up in the 80s, Travis, was totally metal. Like there was just so much stuff that our parents, like, they would just be like, come home when the street lights come on. Like that kind of, they'd have no idea where we were.

We were burning stuff down. Like, compared to today, total terrors. Yeah. Well, I mean, I talk about this. The stuff, I mean, I grew up in the early, early 80s, born 85, but the stuff that we did growing up like you would just be in jail now. You couldn't. And it was fine. It wasn't a big deal.

But you just can't do it now. No, that's right. So, yeah. So this is one of the things that, and I'm maybe turning into like an early, you know, I'm starting to consider entering my boomer years. But like I look around and there's so many things that have gotten better in life and people just kind of just like, oh yeah, it's the way it's supposed to be like this. And then I did a video recently about smoking. Like we've totally won the war on smoking. Like smoking used to be this scourge where people were like smoking on planes.

Like I remember my grandparents, my grandparents smoked menthol. cigarettes, by the way. It's disgusting. But like fires or something similar. Like we, there's so many things. Before you get off smoking, I have to throw in another childhood memory. We made our parents ashtrays in kindergarten, like loop out of clay. That was your little project. You would make your parents an ashtray and bring home. Okay. All right. This is so we've gone totally way off topic because I I brought a deal about fire, but I have to share one more thing about how metal the 80s were. That is totally, totally off topic.

But indulge me. Are you guys familiar with a movie called The Toy? Do you know what I'm talking about? Okay. I don't. All right. I'm going to give you the premise of the 1982 movie The Toy. And I want you to rate on a scale of one to ten, how likely,

are possible it would be to make this movie today. Okay? Are you guys ready for this? All right. It stars Richard Pryor and Jackie Gleason. Richard Pryor is an African-American comedian. I think we're all familiar with him. Jackie Gleason, most people are not familiar with him

because he's been dead for a long time. But he was a big-time movie star back in the 50s. Did the honeymooners and all that kind of stuff. He was Seinfeld before Seinfeld existed. Okay, so here is the premise for the toy. So Jackie Gleason is an old rich white guy. And he has a young son. He's an old guy and he's one of those dads who's super rich and has a young son that he spoils.

And so he has made all of his money by owning a chain of department stores. And Richard Pryor's character is a down on your luck comedian who has taken a night job cleaning one of Jackie Gleason's stores. And Jackie Gleason comes in and says to his son, hey, I will give you anything you want. You are my baby. I am going to spoil you. And they go to the convenience. They go to the department store in the middle of the night when it's closed. And they're walking around.

And the Richard Pryor character is listening to music and does kind of just a routine of dancing and all that kind of stuff while listening to music and cleaning the store in the middle of the night. He doesn't know anybody's watching him. Jackie Gleason and his spoiled son walk up and the spoiled son says, I don't want anything in the store. I want him. That's the premise. That's pretty awful. Pretty bad.

Yeah. I do vaguely remember this now. I do think I remember this movie. Does the Jackie Gleeson character say, no, no, people are different than things and we're all humans together and we should treat everybody with the respect of humanity? No. He tries to negotiate with Richard Pryor becoming his son's friend. buying, buying Richard Pryor for his son.

That's basically the premise of this movie. And it's from 1982. I'm looking at your screen share here. I've never seen a Rotten Tomato score of 3% before. Like, this is the lowest score that's ever happened for a reason. Yeah. Yeah, that was the 80s. Yeah, so the 80s were metal.

There were no, there were no rules. Somebody got this through Paramount. Yeah. This is incredible. Okay. So anyway, oh, scale of 1 to 10, how likely is it to give me today? You'd be canceled just for pitching it. Yes.

Deservedly so. Okay, so we're all in agreement. It's a 1. Zero. It's crazy. Okay, well, let me pitch you on, since we're back to fire, let me put you on this Fierce. I'm going to say, yeah.

Okay, New York City fire suppression and consulting business in New York for sale. They're asking $4 million for it. They do $3.6 million in revenue and $750,000 in cash flow. There is 50% seller financing available. And it's an opportunity to acquire two integrated fire safety businesses with 40 plus years of experience, serving New York City and surrounding areas. Services include fire sprinkler installation, inspection, and maintenance plus a growing consulting division.

They have $5 million in signed contracts in 2025, and they target 25 to 30% net profit. The global fire suppression system market was valued at $22.3 billion in 2024 and is projected to grow at 5% from 2025 to 2030. This will be driven by increasing safety regulations and technological advancements. As regulatory compliance continues to tighten across various sectors, this will drive the demand for fire suppression systems. Compliance with these regulations is mandatory, ensuring a steady market. Innovations such as smart sensors and IoT integration are enhancing the efficiency and effectiveness of fire suppression systems, driving market growth. They service New York City, NASA, Suffolk,

and the surrounding suburbs. They have long-term contracts with hospitals and property managers, and they have established reputation with over 40 years of trusted service and strong local connections, ensuring a loyal customer base and steady revenue stream. They have 16 employees with high retention potential, and a signed confidentiality agreement is acquired for the exact location. The business has been around for 40 years, and they are selling to pursue other business interests. Owner financing is available and contact the seller for more information. And they'll do up to 50% down and provide some supported training. I think this is interesting.

This is totally worth taking a look at. Yeah. So, Heather, have you seen one of these before? What exactly these guys do you? I have. So, I mean, it's a mix of installing new or replacing old sprinkler systems and then inspecting and servicing existing. The key with something like this is the mix of the revenue. How much is new installation versus how much is servicing and maintenance?

You kind of tend to value the servicing and maintenance a little bit higher because it's more consistent than the project revenue, which can be lumpy and cyclical and inconsisting. Now, this is located in an area where there's heavy compliance that's sort of driving the product, right? You've got you've got regulations that are requiring this in certain types of buildings. And that, you know, that's a nice moat to have for a business like this. But I think the key here in terms of valuation for me would be knowing a little bit more about the revenue mix between project and maintenance, the reoccurring type. 100% agree with you on that. It's a 5.3x multiple. Yeah, if it's mostly like, you know, new builds and commercial stuff,

well, that's really difficult to get around. If it's really sticky recurring residential or whatever type of stuff, apartment buildings has to be done X times per year, that comes a little more interesting. Exactly. So you said you like this, Travis, walk us through your thinking on it. All right.

Well, I say it's interesting. I mean, it's been around for 40 years. That's always a good first sign. I think what Heather mentioned, the market here has high regulations. These things are, businesses like this are probably pretty essential, probably are pretty ingrained in the system, whether, the amount that they're required to do is necessary or not.

I can see that being very sticky. Profit margins are pretty good. This isn't going to disappear. Like, AI is not going to disrupt this and take it away type of thing. It really comes down to me is kind of like

the multiple on this. 50% seller financing is certainly really nice, but you're still paying for that eventually too. Like, yeah, it's a nice, but you still have to pay. So that's the biggest question. Hey, everybody. If you've listened to the show, you've probably heard us talk about franchises.

While franchises can be a great path to business ownership for the right person, like there's a lot of pitfalls. And it's important to be really careful, as there are certainly good franchises to be in and bad franchises that you don't want to be in. Connor Gross is a friend of the pod and a resident expert on franchises. And Connor not only owns and operates his portfolio of multiple franchises, but he's also a franchise consultant and helps others work through while picking the right franchise for them. So as he's sponsoring today's episode, everyone should totally click in the show notes below to join Connor's newsletter and attend one of his gateway to franchise ownership workshops. If you're ready to move and move quickly, schedule a call with Connor and his team today.

So how would I potentially structure a deal to buy this business, Heather? I mean, yeah, over five times feels way too high. And it almost feels like the reason they're offering so much seller financing is they're kind of thinking of it like an earn out. You know, we think it's worth this over time and therefore we'll get paid by, you know, carrying back this paper. So I don't love that. As an SBA lender, that's what we do with our clients at VISA. It's always SBA. You can't actually have any earnouts.

So, you know, that's a bit problematic. I think you could structure something at a lower. evaluation, probably nothing more than a four, and maybe lower than that if we find out there's more project work here. And then you, you know, you want maybe a 10 or 15% seller note and, you know, a 10% equity and 80, 85% SBA financing. That's that's the way I would typically see something like this structure. You know, there's there's also the question of whether or not the seller, you know, whether the relationships are transferable. So this is kind of like a contracting business. And whenever we look at contracting businesses, we kind of think about that. Sometimes

those GC relationships that drive the business aren't really very transferable. So that would be another kind of ding on the valuation that might take it a little bit lower if you learn more about how that works. But you could you could structure an SBA loan at about three and a half times that $750 cash flow and your debt coverage would be good and make up the rest with equity and a reasonably structured seller note. I think the thing to know most is how much of this is project-based. That just changes everything. That is the magic key that's going to unlock or kill interest in this business, I think.

Because, you know, it's been a pretty good few years for building new things. And now that's kind of slowing down. That's happening. and all of a sudden half their business gets cut, well, it doesn't matter how much seller finance can you have. It doesn't work. And that maybe is the 50%. That's what they've already maybe experienced,

is that they've had buyers find out that they can't get financing because of project-based work and they're thinking maybe some kind of seller note that doesn't have to be paid monthly the same way. Maybe it's based on revenue or EBITDA or something else. Maybe that's what they're trying to solve for here in offering that much seller financing.

It's a hint or a clue maybe. I mean, is there a play here where you buy this and you try to get into the maintenance? You grow the maintenance part? Like the contract work is just an entry, you know, just a gateway drug for you to kind of transform the business over time. What I've seen in these businesses is you kind of have to win the maintenance when you do the installation. And there's plenty of people who looked at businesses like this where they weren't doing that.

Somebody else got the maintenance. you can't go kind of rewin that maintenance very easily. So it's like you have to grow into more maintenance revenue by doing more projects. So that's what I've seen a lot of times with these kinds of businesses. So it's not that easy to just go compete

and win more maintenance without doing more projects. This could be super interesting for someone who already has some relationships in some sort of real estate play. Like you have those, talk to your buddies, like, hey, won't you use me instead? Right. Do I have any kind of like certifications I have to have to be in this business? Do you have to have Shirley? I would think so. Yeah. This is safety related. Jim Bob's like, oh, yeah, your slinker was like good to me. We're good. So who do we think should buy this?

I'm with Travis. Somebody who's already, somebody's already adjacent to this somehow. They're doing work on these same buildings alongside this kind of business. It needs to be sort of a strategic buyer like that rather than a, first-time buyer and this is the only business that they have. Yeah, I like companies that identify things where their expenses are and then go and acquire those types of companies, right? So I have a friend in the digital marketing space. He's like, oh, I'm spending a lot on content. I'm going to go acquire a content agency. I'm spending a lot on ads. I'm going to go buy an ads agency. Something like this. If you're, you know, a commercial builder and you're building out apartment complexes all day, well, a lot of your money is going to here. Might as well go to there. you have the other relationships, you can expand it from that.

Like that probably makes a lot of sense. Coming in fresh, it's like the multiple doesn't quite work. The cash flow is fine, but it's not like huge, huge, right? So you don't have a ton of wiggle room for, you know, putting in like a nice management layer and stuff like that. Yeah, I think you need to have something already that you can expand upon. Really changes everything. This is definitely one of those markets where it feels like there's a fine line between this being an amazing business and it being a terrible business.

And you have to go figure that out before you decide to become a buyer in this space. And I think the only way to figure that out is to go talk to a lot of people in it, ask a lot of stupid questions. I definitely think that this deal would be worth searchers taking a look at. We can't say does this make sense or not. But you can definitely say it's worth looking into to find out the details. Maybe it is highly attractive. Maybe the owners have been checked out for a long time. Maybe the owners are completely the business, and it can't work without them.

Like, who knows? But those little details will make or break this one. Do we buy this thesis they have here that firespression market is going to keep growing aggressively? Maybe. Depends on what's happening with compliance. I have certainly seen some businesses where I would believe that thesis because of what, you have to really get behind what's changing in the regulation. Have the regulations just increased?

And there's your total addressable market just got bigger because there's all these buildings that have to do something, possibly. But that's the kind of research you need to do to figure that out. I don't see fire suppression regulation decreasing in New York City. Definitely not decreasing. No. It's at least holding steady and maybe it is increasing. And maybe it's encompassing more buildings or the buildings that already have to do it have to have this new technology. They're talking about smart sensors.

You know, maybe that's where the growth is, is that the smart sensors become required at some certain point in the future. And those all have to be installed. Could be something interesting there. That'd be fantastic for this. New regulation. Every building with X amount of occupants has to have the smart sensor, done. Yeah. If you're going to own a business like this that is totally dependent upon super duper growth and regulation, like you definitely want to do that in New York, Boston, Chicago, or California.

Yeah. But if I'm a seller and I know this, I know this market well and I know this regulation is coming, this is also the question of why are you selling now? You know, they say for other business interests, but it's a little curious. It's always a little bit of a tell other business interests. Like I love what people are just like, no, I'm old and I'm retiring. Like, great. Yeah. Other business interests, it means something else is far more interesting to you than this. Or it could just mean, I'm scared. And I'm burned out. I've seen that I'm just burned out of this. And I'll, do anything other than this. See that too.

I sold a business and said it was for other business interests. And when people ask, I was like, yeah, I'm just not the right person to own this business. Like, I was just straight up about it. I was like, this needs somebody who is passionate about this space and can do it better than me. Like, I don't know. I think the bit, if I recall correctly, the business broker was like, that's the first time anybody's ever said that. I was like, oh, well, anyway, we sold the business.

So they seem to buy it. It's one of the best reasons do sell. it if you're burnout if you don't have the passion to drive it like give to somebody else because otherwise it's going to if you're not growing it's going to slowly deteriorate as is i did that with one of my companies same thing like nah i just don't care enough anymore let's let's move on it's totally reasonable all right so heather a searcher brings you this deal what what are the first couple questions you ask so you talk about mix first and foremost is that number one talk about mix um talk about the capital structure here if they're going to try to pay more than five if they're going to pay this

asking price they've it's got to be equity or that seller note has to be basically having almost no payment requirements you know so that the that the bank lender can be ahead of that and feel really comfortable that they've got plenty of room for downside to happen and they still get paid and then I would get into the the skill set fit this buyer have they have they ever run a blue collar business, have they, you know, do they have any experience? How are they going to get trained and whatever the licensing or certifications are required? So I think the individuals fit for this business is really important. It would be to a lender. One thing I don't think we really touched on is they claim there's already five million signed contracts for 2025. And with,

you know, they're targeting 25 to 30 percent net. profit, well, that's pretty big. If it happens to get, what, 30% net profit, then the multiple is almost looking cheap. It's like less than 3x. So if it's a growth play and that these contracts are legitimate, it depends on the type of people signing the contracts, right? Are these like new builds or is it something else? But it becomes far more interesting at that point. Yeah. That may be a sign. Very, very rarely does a mature business. like this add 50% in recurring revenue maintenance contracts in a year. So it makes you suspicious when you look out of the hood kind of our worry that this is mostly

new build contract work, contractor work is, you know, is the story here. But we'll see. So Travis, let's say you you're not doing any of the stuff you're doing now and you're like, hey, I'm going to go do this as a searcher. What would be like the first couple things you do to go? figured this deal out. Obtain a fire suppression contractor license. It doesn't look too hard.

It's like less than 600 bucks. Oh, no, no. It's about like 1,200 bucks total to do it. You must be 18, read and write English, be able to perform the work and have good moral character. Like, this is, I don't feel safe anymore. All right. Anyway, what was your question?

My question was, you're talking to a searcher, an independent sponsor who sees this deal and wants to go figure it out and whether it's worth digging in more. Like, what are the first few steps you do? I need to just have some ideas about how sticky this revenue is going to be. Like, when people bring us deals, we're not guessing on, you know, the future profits of the business. This wants to be, we want to look at things that are very much like a no-brainer. So if we come in and we can get comfortable that, you know, the revenue and the profits, to be very clear are going to be here two, three, four, five years from now, then we can get behind it.

And so that's, that's the first step for us to take a look at anything is how sticky is this? Because we're always, we're not necessarily looking for specific things to back. We're looking for things not to back. Like, we're very agnostic with what we're interested in. Like, anything will work as long as it doesn't have these, like, trigger points that for us to say no to. So in this case, yeah, the stickiness and the predictability of the revenue is the

biggest thing. Yeah. And I think for me, you know, I would definitely talk to the broker and, you know, kind of get their opinion on the business, understand the dynamics you're talking about, the stickiness of the revenue. I would actually also just start calling everybody I know for a few weeks and try to network to folks. I'd call owners in this space, experts, read every article I can.

There's, you know, this is one of those spaces where I think there's some nuance. between being highly profitable and being in a dumpster fire. And I would want to learn that really quickly. And you could do that, I think, while you're exploring a deal like this, there's nothing other wrong putting forth an LOI while you're starting learning the space. A lot of times making an offer is a great way to learn something about the business and the market. Cool. All right.

So, let's wrap this one up. Travis, where's your head at on it? Thumbs up, thumbs down? It's neutral. I just have to see more. I would be very inclined to look deeper, though, for sure. Heather? Same.

I would get the book and I would want to get some questions answered, definitely. Well, I'm supposed to, for the sake of good radio, say no, this is horrible and, like, be, you know, be that way. But I actually like it, I think for the right searcher, I'd go dig in. But look, I think 99 times out of 100, there will be something about this that just makes it totally, as you said, Heather, unfinanceable or untenable for your typical buyer. So be really curious. Curious if anybody looks at this one, they can let us know what they find out. All right. So, Travis, people can find you at Capitalpad.com.

If you're a searcher that you have a deal, ready to go, right for the equity raise, bring it to us. We would love to take a look and see if it like, you know, checks all of our boxes. And then if it does, we'll present it to our investor base. And what kind of deal size range do you guys tend to do? Probably the smallest deal we've done is about a $3 million enterprise value deal. The largest is around a little under $20 million. I mean, that's obviously the independent sponsor space, but the searcher space, the minimums three. Super cool.

All right, everybody. Thanks for being here. We'll see you next week.